By David Maggs, Metcalf Fellow on Arts and Society

I had the pleasure of speaking with Upkar Arora recently. In addition to being the CEO of Rally Assets, and one of the wholesalers of Canada’s $755 million Social Finance Fund, Upkar is also a great lover of the arts and music. He is the chair of Why Not Theatre, the past chair of the McMichael Canadian Art Collection, the steering committee chair of the Canadian Arts Summit, and has been working with us at the Metcalf Foundation to help build the relationship between social finance and Canada’s cultural nonprofit sector.

Upkar Arora, I first met you at the Canadian Arts Summit a few years ago and was delighted to discover that one of Canada’s most prominent financial thinkers is also such a dedicated fan of the arts. Where did that come from?

David, I wish I could say it came from a deep, profound ability for artistic expression myself, but alas, this was not the case. I developed a love of music at a young age — really, an obsession with music – and that grew into a lifelong appreciation of the transformative potential of the arts. It was an epiphany at a performance at the Grand Theatre in London, where I grew up, where I truly experienced the power of art to transform, to entrance, and to move you to different worlds. That experience never left me.

Did that come from family life? Or was it something you gravitated towards while your parents wondered what was happening to their son?

As a child, I think that shared love of music was a way for me to connect, to fit in with people different than me. Maybe also a bit of an escape from the hardships of a new immigrant life?

You are the CEO of Rally Assets. What is Rally Assets and what are you doing there?

Rally is an impact investment firm trying to shift capital systems to advance sustainability, equity, and justice for all. What that means is we’re using capital in a way that delivers social or environmental impact along with financial returns.

We often hear the terms social finance and impact investing used interchangeably, are they different?

Social finance is a little bit more of an umbrella term that encompasses impact investing strategies and a broader toolkit, but for the purpose of this conversation, the distinction is not that crucial.

Why is social finance emerging in the world right now?

Social finance has long roots from faith-based investing, socially responsible investing, and more recently, conscious capitalism — moving away from maximizing profit for shareholders as the only purpose of business. When the Sustainable Development Goals were adopted by 193 countries in 2015, there was a recognition that the amount of capital needed to solve systemic issues was in the trillions of dollars. That amount would have to come from multiple sources including private, government, philanthropy, and NGOs. Today, social finance builds on the aspiration to progress on the global challenges we face, and the enormous capital required, by bringing all these sectors together.

Thanks Upkar. What about Canada? What’s the approach here at home to this emerging finance trend?

For years, Canada was lagging relative to other countries, but we’ve made significant progress recently. The federal government announced the $755 million Social Finance Fund in 2018. It launched in 2023 and the three wholesalers — ourselves, Boann Social Impact, and CAP Finance — have been very active in investing capital into funds and building the market to deliver social equity outcomes and raising private sector capital to help build a thriving social finance ecosystem.

Optimistically, the result here will be?

To translate investment into meaningful and measurable impact. The money moves from government to three wholesalers, and along with additional private capital, we invest in funds focused on climate, health, education, and other social goods, which then invest in social purpose organizations delivering products, services, solutions, and access to beneficiaries.

And why all these steps?  

The design is trying to ensure the entire system and flow of capital is effective in achieving social equity outcomes. That means looking at all of the parts of the system that are, right now, contributing to a sub-optimal result. Capital is clearly a critical component, but we also need to create the infrastructure, the plumbing, the training, the wraparound supports so that the stimulus from the government ultimately translates to Canadians on the ground having better opportunities, better access, better chances for empowerment, economic prosperity, and  wealth building.

How is it unfolding so far?

It’s been powerful. When I’ve shared Canada’s approach at global forums, people have been genuinely surprised at how thoughtfully we’ve structured this. Our approach to challenges like impact measurement has been quite innovative. If you look at Canada’s commitment to social finance relative to its size globally, it’s very significant. At Rally, we’ve made several investments in both existing and new fund managers across Canada, supporting initiatives particularly aimed at historically marginalized communities. It’s a long-term strategy with many systemic issues to tackle, but the groundwork is there for significant long-term benefits.

And arts and culture? How has our sector fared within this emerging strategy?

Sadly, for the most part, it’s been invisible.

Why?

Several reasons. First, arts and culture don’t fit neatly into traditional categories of equity-deserving groups. Second, arts funding traditionally relies on grants, so there has been limited familiarity or appetite for alternative funding methods. Third, there is the perception of higher risk in the sector. Finally, unlike fields of health, environment, education, or justice, the number of private funders specifically focused on arts and culture as a public good is limited, creating a perfect storm of invisibility.

I’ve enjoyed collaborating with you on exploring how social finance could support Canada’s cultural sector, but I’ve never asked you directly: what’s your big vision here? Given your knowledge of both sectors, how do you see these worlds converging in the next few years?

David, as you know, arts organizations and artists in Canada have typically faced chronic underfunding, resulting in precarity. I think we have an opportunity for an ambitious, transformative vision. It’s not just about capital; it’s about deeper changes it might bring to our sector, particularly in this challenging geopolitical moment. Leveraging social finance can help transition arts organizations from precarity to resilience, building deeper connections across communities nationwide. We should view this as a pivotal opportunity to shift mindsets, paradigms, and belief systems — moving beyond the patterns that are limiting us, funding the arts properly with diverse sources, and harnessing their enormous economic, social, and cultural benefits as well as their power to connect, influence, and create community in an increasingly polarized world.

Your response captures a lot about shifting mindsets. Our sector’s size and activities have historically been dictated by available funding — so often, we get only as big and busy as our grants allow. But as organizations grow increasingly dependent on public funding and public funding becomes increasingly oversubscribed, a recipe for precarity gets baked into the system. Could social finance help relieve that?

Absolutely, if it’s seen as an additional tool rather than a replacement. Grants will always be essential; social finance can complement that, along with earned revenue like ticket sales. Importantly, social finance may allow us to turn our gaze to the longer-term requirements and opportunities compared to annual grants, enabling risk-taking and investment in innovation or capacity building. It breaks the cycle of perpetual scarcity, creating true resilience rather than responding to the yearly survival treadmill.

Observing how other social purpose organizations have adapted to social finance, what successful strategies have you noticed?

There are probably three main elements. First, availability and understanding of capital; second, readiness to take on repayable capital, including financial literacy and realistic expectations; and third, clearly defined anticipated impacts. Beyond these, non-capital supports like mentorship, training, networks, and partnerships are crucial during transitions. Fundamental mindset changes are also essential — not just minor operational shifts, but deep changes in how organizations view themselves and their sustainability.

For arts organizations specifically, what do you foresee as their major challenges? Accessing capital? Investment readiness? Having investible projects that generate revenue above expenses? Or a mindset change?

All of the above. Financial literacy is essential. Ironically, artists routinely take huge creative risks, yet there seems to be hesitancy around the risk of exploring new financial models. Traditional win-lose, zero-sum grant models may encourage competition over collaboration. Shifting towards collaboration, learning from failures, and experimenting in finance — just as we do creatively — will be crucial. Embracing innovation naturally involves risk and occasional failure, but that’s precisely how systems will change and strengthen over time.

Since Canada’s cultural sector is heavily influenced by policy and funding decisions, do you see a significant role for cultural policymakers and public arts funders in advancing this initiative?

Without a doubt. Policy could include creating dedicated innovation funds, incentivizing private foundations and donor-advised funds to support arts and culture, and shifting towards stable, long-term funding models rather than the short budget cycles we see in granting.

I’ve been struck by the potential of catalytic capital — the kind the government used to create the Social Finance Fund — to shift entire systems. Canada’s cultural sector seems ripe for leveraging similar capital since supporting culture is already accepted as a public good, we actively fund. Am I overly optimistic?

It’s nuanced. I wouldn’t say there’s a large pool of unused capital, but there’s certainly potential for more targeted, strategic funding. For example, Hugh’s Room in Toronto recently issued community bonds to remain open as a music venue, showcasing blended finance models, and the issue was oversubscribed. Exploring similar mechanisms — low-interest loans, repayable funding, or revenue-based financing — could contribute to long-term sustainability in arts and culture.

This is very exciting, Upkar. Thanks for taking the time to talk to us and thank you for your ongoing support of innovation in Canada’s cultural nonprofit sector.

It’s my pleasure.